Lawsuit accuses Wells Fargo of ‘aiding and abetting’ alleged Ponzi scheme
Wells Fargo bank has been accused of “aiding and abetting” an alleged $300 million Ponzi scheme that reportedly bilked more than 1,000 victims, many who were elderly and lost their life savings.
According to a lawsuit filed on May 9 in Palm Beach Circuit Court by the receiver appointed in the case, the bank failed to stop operators of the scheme from diverting funds from Wells Fargo accounts set up to hold investments from later investors into Wells Fargo accounts created for earlier investors.
Wells Fargo did not immediately respond to requests for comment about the case late Tuesday afternoon. The company has not yet filed a response to the lawsuit, according to court records.
In July 2021, the Florida Office of Financial Regulation filed a civil lawsuit against a long list of companies, saying they engaged in the sale of unregistered securities.
The scheme was developed by Marshal Seeman and Eric Charles Holtz, operating in Boca Raton as Seeman Holtz, the office alleged. Seeman and Holtz were assisted in their operation by Brian J. Schwartz, the state’s lawsuit said.
Seniors from Florida and throughout the United States who believed they would earn interest as high as 8% annually invested between $100,000 and $10 million in promissory notes purchased from a company created by Seeman and Holtz called National Senior Insurance Inc. and several affiliates, an attorney representing the investors said in 2021.
They were told they were purchasing securities that were backed by life insurance policies owned by Seeman Holtz, according to multiple lawsuits filed by investors in 2021.
Instead, their money was used to pay new investors in what the newest lawsuit called a Ponzi scheme.
“Most of the investors in the notes have lost their entire investment which, in some instances, was their life’s savings,” the suit against Wells Fargo states. “Many of the investors have no other income, subsist almost exclusively off Social Security benefits, and are now struggling desperately to find the means to sustain their livelihood.”
The state was granted a temporary injunction to stop the operation in July 2021 while Daniel J. Stermer, an attorney with Fort Lauderdale-based Development Specialists Inc., was appointed as a monitor to oversee the companies’ remaining assets.
Holtz killed himself in June 2021, five days after one of the investors filed a class-action suit against Seeman Holtz. Schwartz died last year, Stermer said in an interview Tuesday.
In May 2023, Stermer’s title changed to receiver and he was given a mandate to “bring money back in,” Stermer said.
So far, $4.75 million has been recovered while Stermer has filed lawsuits against 15 other entities in an effort to recover more. Stermer said that as receiver, he plans to soon resolve the Department of Financial Regulation’s complaint by agreeing to a consent order that will permanently prevent the Seeman Holtz companies from selling unregistered securities.
The complaint against Wells Fargo accuses the bank of unjust enrichment, negligence, aiding and abetting fraud, and aiding and abetting Seeman and Holtz’s breach of fiduciary duties.
The bank served as trustee of the irrevocable life insurance trusts and as securities intermediary of the life insurance policies, and also opened 31 bank accounts for the Seeman Holtz companies, the suit states.
The suit alleges that the bank failed to stop the Seeman Holtz companies from using funds raised by companies formed in the latter years of the operation to pay interest and principal to investors holding notes in the companies that were formed earlier.
“Wells Fargo knew, or should have known, of the Ponzi scheme and extensive fraud,” the suit says, because it oversaw “both sides of the scheme.”
The bank also knew, or should have known, that three sets of companies “comingled and transferred investor money between the Wells Fargo bank accounts without any legitimate purpose or financial arrangement,” the suit states.
The lawsuit seeks the return of income and fees generated by Wells Fargo from the operation’s use of its accounts, plus interest and other costs.
Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at rhurtibise@sunsentinel.com.